Japan’s fragile economy, already hurt by U.S. tariffs and declining investments in property, faces another hit due to the diplomatic spat between Tokyo and Beijing.
Miffed over Japanese Prime Minister Sanae Takaichi’s comments related to Taiwan, China on Friday advised its citizens against travelling to the country. Japanese tourism-exposed stocks fell in the aftermath of that warning, while experts caution the impact could be more severe over a longer duration.
Mainland Chinese tourists have been the largest group of foreign visitors to Japan so far in 2025 at about 5.7 million, or nearly 23% of all visitors, according to Japan’s National Tourism Organisation.
Takahide Kiuchi, executive economist at Nomura Research Institute, said tensions between the two Asian powers could result in a 1.79 trillion yen drop in Japan’s GDP over the course of one year — a 0.29% decline in the country’s GDP.
Mainland Chinese tourists to Japan dropped nearly 8% in 2013 compared to 2012 when there was a dispute over islands off western Japan in September 2012, known as the Senkaku in Tokyo and Diaoyu in Beijing. Kiuchi sees a similar risk in how the current situation is unfolding.
